Kunal Yadav vs. S.V.C. Co Operative Bank Limited

Held

The Court held that the decisions in Malcolm Murayis and Archana were applicable mutatis mutandis to the present case. The Court directed that the disputed amount in the petitioner's bank account be kept in a Fixed Deposit (FD). If any other complaints were received by the bank concerning other entries, the bank was permitted to take appropriate action in accordance with law, keeping in mind the SOP. The disputed amount would be allowed to be liquidated only after orders were passed by the competent Judicial Magistrate within three months. If the police agency failed to proceed in accordance with law within this timeframe, the amount kept in FD could be withdrawn by the petitioner, with intimation to the police agency. Crucially, the Court ordered that the petitioner's bank account be unfrozen and that the petitioner be permitted to operate the account. The Court did not expressly leave any issue undecided.

Facts

The petitioner, Kunal Yadav, filed a writ petition seeking to unfreeze his bank account (Account No. 300003000096503) with M.V.C. Cooperative Bank Limited. The account was frozen based on an intimation from cyber cells of various police stations alleging involvement in cyber fraud. The petitioner contended that he was not notified and was lawfully conducting his business, suggesting that a fraudulent party might have transacted through his account. He sought the removal of the freeze or, alternatively, a limitation of the freeze to the disputed amount, allowing him to operate the remainder of his account. The petitioner relied on previous judgments from the High Court of Madhya Pradesh, specifically the cases of Malcolm Murayis & Ors. Vs. State Bank of India and Others and Archana Vs. The State of Madhya Pradesh and Others, which dealt with similar issues of frozen bank accounts due to cyber fraud allegations and the application of a Standard Operating Procedure (SOP) for grievance redressal.

Key Issues

1. Whether the freezing of the petitioner's bank account by the respondent bank, based solely on intimation from cyber cells without prior notice or adherence to due process, is legally sustainable, particularly in light of the Standard Operating Procedure (SOP) dated 10.04.2026 issued by the Ministry of Home Affairs? (Question of law and mixed fact and law, concerning principles of natural justice and procedural fairness). Petitioner's arguments: The petitioner argued that the freezing was arbitrary and lacked due process, as he received no notice. He contended that his business was lawful and that the freeze should be lifted or restricted to the disputed amount. He relied on the High Court's decisions in Malcolm Murayis and Archana, which emphasized adherence to the SOP and timely grievance redressal. Revenue/State's arguments: The respondent bank argued that it froze the account solely on instructions from cyber cell police stations and was bound by those directives. The judgment does not explicitly record arguments from the cyber cell police stations or the State beyond the bank's submission.